Gold Rush: Record High Price Could Pay Off

With gold peaking at an all-time high, that gold ring on your wedding finger just got a little bit heavier.

Fueled by a weakening dollar and a “high inflationary environment,” gold futures eclipsed a record $1,500 an ounce today.

So if you are looking for some quick cash, the time has never been better to drop by your neighborhood pawnshop with a handful of gold.

At , the higher the cost for an ounce of gold, the more cash you’ll get back for your precious metals, said employee Mark Flanagan.

For those with a chest full of gold rings and coins, Quinnipiac University Professor of Finance Osman Kilic's advice is to “hold on to your physical goods and think about investing in the future.”

“The trust in paper currencies all throughout the world has been going down,” Kilic said. “Sooner or later, inflation will be a huge problem and gold historically has been a hedge.”    

In today’s “high inflationary environment,” gold offers protection against inflation because you can use it to buy goods, said Kilic.

“It’s a safe object that you can easily trade,” he said, adding that it could take a while for investors to build up confidence in the dollar and euro again.

“Gold is more stable in terms of its intrinsic values,” said Paul Portnoy, vice president of . “It’s independent of currency swings; you theoretically will always be able to use it.”

However, it is not something to build an investment portfolio around, said Portnoy.

“I tell [my clients] gold has no real value outside of its ability to hedge against inflation,” he said. “I don’t personally believe your portfolio should have all your investments in commodities. Ten percent [of the entire portfolio] is generally a good number, but no more because gold has very limited commercial application.”

Unlike other metals like copper, which can be used for plumbing and electrical purposes, gold is generally not used in the manufacturing industry, said Portnoy. He said he is not convinced gold has any other value than acting as a hedge to inflation.

Kilic foresees a 10 to 20 percent reduction in the price of gold to occur within the next couple weeks. He said the Federal Reserve’s decision to finish QE2 – a program in which the Fed pledged to buy $600 billion to spark economic growth that ends in June – might be the cause of a “sharp decline.”

Therefore, Kilic said gold futures investors should sell 50 percent of their holdings and buy it back after the anticipated reduction.